Shares in Europe rose on Monday when it opened despite a sharp drop in commodity prices and a choppy weekend for cryptocurrencies.
The German DAX (^ GDAXI) was closed for Whit Monday. Today will be a quieter trading day in Europe as the markets in Switzerland, Denmark, Norway, Belgium and Austria are also closed for the public holiday.
Commodity prices suffered on Monday after China announced a new crackdown on “speculators and hoarders” to defuse the commodity boom.
China’s National Development and Reform Commission (CNDR) issued a strict warning against manipulating commodity prices and promised to show “zero tolerance” for monopolies in the markets.
“This round of price increases is the result of several factors, including international broadcasting, but also has many aspects that reflect over-speculation,” it said.
China’s most traded iron ore futures contract in Dalian extended the loss to more than 9%, according to news reports, while iron ore slipped 9.5% for delivery in September.
Steel and copper prices have also fallen.
Watch: the iron ore rally stutters as China seeks control
“There are increasing signs of deadlock in the economy as the strength of demand outstrips supply,” said Richard Hunter, market leader for Interactive Investor. “Whether it is raw materials or labor, the pressure is clearly inflationary.”
“The question that is currently baffling investors is whether this is a passing effect as supply quickly catches up with demand, or whether broader factors such as higher prices play a role in the current deglobalization trend exacerbated by the pandemic play.”
Last week the Dow (^ DJI) recorded its fourth negative week in five, while the S&P 500 (^ GSPC) posted two consecutive weeks of losses for the first time since February. The Nasdaq Composite (^ IXIC) meanwhile gained 0.31% and broke a four-week streak of bad luck.
Asian stocks opened cautiously on Monday and later closed mixedly as investors waited for key US inflation readings for guidance on monetary policy.
MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan fell into slow trade. The Nikkei (^ N225) climbed 0.2%, while the Hang Seng (^ HSI) fell 0.3% and the Shanghai Composite (000001.SS) rose by 0.3%.
Bitcoin (BTC-USD) also tried to stabilize after being hit by China’s crackdown on cryptocurrency mining and trading over the weekend.
Bitcoin even fell 14.5% to $ 33,038 (£ 23,347) while other currencies followed a similar course. Ether (ETH-USD), the second largest crypto in the world, crashed 23%, trading for $ 1,901 and Dogecoin (DOGE-USD) fell as much as 20% to $ 0.28 during the session.
IG’s Kyle Rodda said, “After a brief rebound from last week’s multi-month lows, some of the paper-handed guys seem to have broken even or decided to wrap them up and cut their losses to get Bitcoin going and the speculative mania that drove it disappears almost completely. “
Observe: What are the Risks of Investing in Cryptocurrency?